State Bank of India, the country's largest bank and also the largest home finance company has now become the largest car loan providing bank too. The bank plans to strengthen its position further by introducing a lower and uniform interest rate of 11.25% for all durations of loans.
The state owned lender is targeting a 25% growth in its car loan books, which according to sources is at around Rs. 20,000 crore (FY11-12).
The bank launched a campaign last September, which enabled it to tender loans to 125,000 cars. The number of car loans declined to 75,000 in the quarter ending March 31, this came as a result of increase in the interest rate. After the RBI's decision to cut Repo Rate, the bank also slashed its interest rate.
A senior official stated the campaign had been instrumental in increasing the number of loans the bank issued in the last two quarters.
The bank has a strong relationship with dealers across the nation and has signed a memorandum of understanding (MoU) with major manufacturers, which will fuel the growth of car loans.
Currently the average loan amount is Rs. 3.5 lakh. Provision of online loan sanctioning is also on the cards.